In today’s business world, compliance is key. Many industries are changing at a rapid pace as technology advances, and the increasing connectivity of the globe has even led to international compliance standards like GDPR. If your company isn’t adhering to industry compliance, your business is bound to run into trouble.
To ensure that your workers understand and follow compliance regulations, it’s important to invest in a quality compliance training program. But here lies the big question: what makes a compliance program “quality”? How do you know if your program is effective?
The answer lies in key performance indicators (KPIs). Here’s how you can measure KPIs for your company.
The Importance of Measuring Compliance
Maintaining compliance is important for every business — but it can also be very costly. According to a survey from the Risk Management Association, the average company will spend about 6-10% of its revenue on compliance costs each year.
Such a significant expense MUST be worth the investment. However, if you’re not measuring the success of your compliance program, you will have no way of knowing if your funds have been well spent. Tracking your KPIs can help you see where your compliance program is failing so you can make adjustments and improve compliance throughout your organization.
What Can KPIs Measure?
To put it broadly, KPIs can measure the efficacy of your compliance program.
GRC
GRC stands for Governance, Risk Management, and Compliance. These three elements are widely considered the foundation on which an organization can achieve its objectives. With proper GRC, you can reduce risk and maximize efficiency throughout your company.
And if you establish KPIs to monitor and measure your GRC successes, you will likely find even more ways to maximize your efficiency! KPIs can give your compliance managers a little extra support by pointing out areas of your GRC processes that aren’t measuring up to where they should be.
Financial Compliance
Financial compliance refers to your company’s ability to follow state and federal rules and laws regarding finances. These compliance standards (which include audits and reporting) help ensure transparency and integrity within your company, especially if you work in the financial sector.
KPIs are vital here because they can help you identify potential bad actors who are making your company non-compliant and putting you at risk for financial crime and similar risks. KPIs for this type of compliance include gross profit margin over a certain period.
Data Storage and Management
As businesses become increasingly digital, data storage becomes more important than ever. Therefore, you must make sure that your workers are following any standards or regulations related to storing and managing your proprietary data.
KPIs for data storage can include storage utilization, planned unavailability (when your data is inaccessible due to planned maintenance downtime), and more. By tracking the way your business handles its data, you can reduce waste and prevent data leaks.
Purchasing Compliance
Purchasing compliance refers to a company’s adherence to established guidelines when it comes to making purchases for your business. You can use KPIs to track spending, lead times, and quality — all of which can help improve your operations in the long run.
Types of Compliance and Ethics KPI’s
Once you determine which parts of your business you want to monitor with KPIs, you need to determine what type of KPI you’ll use to measure growth. There are three types of KPIs: activities, process, and outcome.
Activities KPIs seek to answer the question, “What are we doing to improve compliance?”. These KPIs are actionable, addressing areas where there may not be a compliance system in place. If you don’t see a current activity or standard in place to ensure compliance in an area of your business, you can use these KPIs to make sure a program is established.
Process KPIs refer to the constant growth and evolution of compliance in business. This type of compliance addresses the question, “How mature or reliable are our compliance and ethics management systems?” KPIs you establish around processes will ensure that your training and policies are up to date and accurate for your industry’s current standards.
Finally, Outcome KPIs are used to answer the question, “Are our activities and systems yielding improved outcomes?” These KPIs are likely most popular among business owners, as they focus on the bottom line and improvements above all.
Of course, no matter what kind of KPIs you use to measure growth in your business, you will need a compliance program that’s designed to meet all your needs. Contact ComplianceLine today to see how our compliance training programs can help your organization.
